Pennsylvania Superior Court Declines To Compel Arbitration Of Tort Claims Despite Broad Arbitration Clause

Among the basic principles in arbitration law are: (1) courts should favor and defer where possible to a valid arbitration clause and (2) an arbitration clause that intends to arbitrate "any dispute" "arising out of or in connection with" the underlying agreement should be construed broadly to include any claims relating to the agreement, including tort claims. On October 23, 2012, the Pennsylvania Superior Court chose not to follow these principles. Instead, in a 2-1 decision, it affirmed a trial court's order dismissing the defendant's petition to compel arbitration in Setlock v. Pinebrook Personal Care and Retirement Center, ruling that negligence claims filed by a deceased nursing home resident need not be arbitrated notwithstanding the existence of a broad arbitration clause. While the court's opinion appears to be the product of bad facts, it is not clear how confined the ruling will be to those facts. Pending clarification by future cases, there are present steps parties can take to avoid the same fate.

In Setlock, the appellee was a wheelchair-bound nursing home resident. According to the amended complaint, an employee of the appellant negligently used a wheelchair to transport the appellee from the nursing home to her treating physician for an appointment. Due to the appellant employee's negligence, the appellee fell out of the wheelchair during the trip, causing injuries that allegedly led to her death. Her estate filed a wrongful death and right of survivorship action seeking punitive damages and pain and suffering. The appellant sought to compel arbitration based on an arbitration clause that existed in the Resident Agreement signed by both parties. The trial court denied the request.

On appeal, the Superior Court recognized the arbitration clause was valid. It also recognized it was broad, since the clause stated "[a]ny Dispute controversy arising out of or in connection with under or pursuant to this Agreement shall be determined by arbitration ...." Nevertheless, the court ruled the clause did not cover the appellee's causes of action. In reaching this result, the Superior Court relied on two prior decisions, but in a curious way. First, it referred to a 1999 Superior Court decision, Midomo Co. v. Presbyterian Housing Development Co. There, the court declined to order arbitration based on an arbitration clause that was completely different from the clause currently before the court in Setlock. The clause in Midomo expressly...